Hong Kong’s dismantling of hotel quarantine on arrivals has been met with demands for the city to lift remaining restrictions on travelers in a bid to revitalize its fortunes as an international financial hub.
While business groups and analysts applauded the move, they said the government must come up with a clear roadmap for full reopening. Nearly three years of pandemic restrictions have devastated Hong Kong’s economy, urging residents and businesses to relocate abroad. A report underscoring the urgency shows Singapore has overtaken the city to become Asia’s leading financial hub.
Hong Kong travelers will no longer have to undergo hotel quarantine or take a PCR test before departure, the city’s chairman John Lee said on Friday. Instead, arrivals will not be allowed to go to bars or eat in restaurants for three days, while they will have to test daily for seven days. If they test positive, they must be isolated for at least seven days.
“The easing is welcome as it represents significant improvements,” said Sally Wong, chief executive officer of the Hong Kong Investment Funds Association, whose membership includes both regional firms and some of the world’s largest wealth managers such as BlackRock Inc. and FIL Investment Management. “But we hope that the government can shed light on the last mile, ie under what conditions can all restrictions be lifted so that we can catch up with international financial centres?”
Hong Kong is suffering an exodus of residents, with its population falling the most in at least six decades in the year to June. In the latest sign of brain drain, a survey by the Hong Kong Investment Funds Association showed that more than a third of fund management firms have relocated some or all of their regional and global functions away from the city. Investors are also optimistic as the city’s benchmark stock index is at a decade low.
Hong Kong’s image at ‘lowest point’
“Hong Kong’s image abroad is at rock bottom,” said Inaki Amate, president of the Spanish Chamber of Commerce. “A comprehensive plan with incentives, actions and projects to change the big picture but also to re-attract all the different target groups is needed.”
Hong Kong is trying to show that the city is back on the global stage by hosting several high-profile events, including an international banking summit and the iconic Rugby Sevens tournament, scheduled for November. Lee said there may be “more leeway” for the government to further ease restrictions, without giving details. Among other rules, the city still insists that masks be worn both indoors and outdoors, with violators facing a hefty fine.
With Hong Kong lagging behind much of the rest of the world in lifting Covid measures, its closest rival Singapore in particular is taking advantage by targeting Hong Kong’s high earners with a new, flexible five-year visa.
“Singapore has been a huge beneficiary of this talent drain: they’ve managed to attract many of our best and brightest people, as well as many of our most promising young companies,” said Ben Quinlan, chief executive officer of consulting firm Quinlan & Associates.
According to Nomura, lifting the quarantine is unlikely to give local retail and hospitality a big boost as the border with mainland China remains closed. Instead, the move will encourage residents to travel abroad, which would negatively impact the economy, analysts led by Ting Lu wrote in a report on Friday.
Cathay Pacific Airways Ltd website and those of their low-cost unit collapsed amid an onslaught of flight searches on Friday. In a sign of how isolated Hong Kong has become, the city’s airport handled just 3.4% of the passengers it had before Covid and 30% of flights in the first eight months of this year.
According to Michael Tien, MP for the National People’s Congress and MP for the city, the relaxed rules are unlikely to discourage tourists from visiting.
“For overseas travelers, lifting the hotel quarantine makes little difference” because “they still face the nightmare of PCR testing,” Tien said. “Hong Kong must also scrap the three-day surveillance, otherwise it’s pointless.”
Hong Kong’s strong currency can also act as a deterrent. The Hong Kong dollar, which is pegged to the greenback, has risen against all Asian currencies this year — including a 24% rise against the Japanese yen and a 5% gain against the Singapore dollar.
The city’s economy needs a boost in its arm. Officials have already downgraded Hong Kong’s full-year growth forecast, forecasting a possible contraction amid Covid-related restrictions and rising global inflation. The local monetary authority has also been forced to follow the hawkish US Federal Reserve in successive rate hikes.
“At this point in the pandemic, every industry and every business is pretty exhausted,” said Perry Yiu, a tourism sector lawmaker. “The tourism industry needs a roadmap for a complete reopening, otherwise we have nothing to plan or prepare.”
—With the support of Bei Hu
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